4 room apartments, an ideal investment class

When less is more.   We are often asked by investors whether 4 or 5 room apartments make more investment sense.

Assuming all things are equal, I have little doubt that 4 room apartments make much more efficient investment vehicles. Rental returns on say a new 4 or 5 room apartments in good areas are more or less the same, at around 3.4% per year.

However, the magic of 4 room apartments lies in the great demand for these apartments. Whereas 5 room apartments are generally demanded by families with three or more children, the market for 4 room apartments is less defined. Tenants for these apartments range from young families to smaller families to retired couples who generally seek a spare room or office.

As a result, demand will be stronger and less seasonal. In addition, the upkeep and maintenance of 4 room apartments will be less severe.

Current prices for new 4 room apartments in Raanana are approximately NIS 2,200,000. Rental on these apartments are around NIS 6,200 per month. Current prices for new 5 room apartments in Raanana are approximately NIS 2,550,000. Rental on these apartments are around NIS 7,300 per month.